Obama’s new budget is a bad joke

February 13, 2012

Just as we expected it would be.

Phillip A Klein takes a look at it and compares it to Obama’s promises on entering office. Here’s his takeway:

Obama spent most of last year lecturing the country on how he supported a so-called “balanced approach” on deficit reduction. Time and again, he said he was ready to make real changes to Medicare, Medicaid and Social Security if only Republicans were willing to budge on the revenue side. He repeated this in a lot of speeches and insisted that behind the scenes he was really, really, ready to cut a deal with the GOP during the debt limit talks. But he never presented a tangible plan that could be scored by the CBO and evaluated next to Rep. Paul Ryan’s plan to reform entitlements and put the nation on a sustainable fiscal course. He had his chance with this budget. Instead, Obama decided to forgo tough choices so he could attack Republicans during an election year.

Bear that in mind: we have a president far more interested in his own electoral fate than the fate of the nation.

Meanwhile, James Pethokoukis accuses Obama of doubling-down on class warfare in this budget:

Here’s pretty much all you need to know about Obamanomics: In 2011, the Obama White House suggested raising the top dividend tax rate to 20 percent from 15 percent. Keeping the dividend rate at a relatively low level, the White House said, “reduces the tax bias against equity investment and promotes a more efficient allocation of capital.” Makes sense, right? Basic economics.

Yet in his brand-new, 2013 budget, Obama calls for taxing dividends as ordinary income, essentially raising the top rate all the way to 39.6 percent. And then when you tack on the 3.8 percentage point Obamacare surtax — and an additional 1.2 percentage point itemized deduction phase-out for high-end taxpayers — the rate rises to 44.6 percent.

So apparently Obama is now in favor of a greater bias against equity investment (and in favor of debt) and promoting less efficient allocation of capital. And this helps create an economy “built to last” in some way?

Of course, it doesn’t. Not at all. More like “built to fail.” Then again, Obama’s new budget isn’t about economic growth or cutting debt or creating a “built to last” economy. The Obama campaign is built around the idea of reducing inequality. So in his budget, Obama takes the populist whip to the wealthy and to business…

And to people who depend on dividends for their retirement, whether directly or through pension funds. Including the middle class.

Why does Barack Obama hate retired people?

(Crossposted at Sister Toldjah)

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Can we call them “Socialists” yet?

January 19, 2012

Harking back to some of the worst excesses of the New Deal, six Democratic members of the House lead by Denis Kucinich (D-UFO) and all but one members of the Congressional Progressive Caucus, have proposed an additional tax on oil companies to be levied when profits rise above “a reasonable level”:

The Democrats, worried about higher gas prices, want to set up a board that would apply a “windfall profit tax” as high as 100 percent on the sale of oil and gas, according to their legislation. The bill provides no specific guidance for how the board would determine what constitutes a reasonable profit.

The Gas Price Spike Act, H.R. 3784 (PDF), would apply a windfall tax on the sale of oil and gas that ranges from 50 percent to 100 percent on all surplus earnings exceeding “a reasonable profit.” It would set up a Reasonable Profits Board made up of three presidential nominees that will serve three-year terms. Unlike other bills setting up advisory boards, the Reasonable Profits Board would not be made up of any nominees from Congress.

The bill would also seem to exclude industry representatives from the board, as it says members “shall have no financial interests in any of the businesses for which reasonable profits are determined by the Board.”

And, of course, “reasonable” would be in the eye of the beholder: in this case, appointees of Barack Obama, renowned class warrior and Socialist. What could go wrong?

Of course, this isn’t about the economic ignorance of the members sponsoring the bill; they’re leftist Democrats, progressives. It’s practically an unwritten law that you have to give up any understanding of basic economics to join that club. The idea that these profits can be returned to shareholders, including pension funds and individual middle-class Americans, many on retirement, via dividends and capital gains is immaterial. And don’t even think of suggesting that these oh so unreasonable profits could be used to expand the business or explore for more oil —or both!— thus creating jobs.

Like I said, to join the club, you have to forswear any economic common sense.

No, this bill, which will never pass the House or even get out of committee, is nothing more than an election year appeal to the worst of Americans populist instincts: class warfare, punishing those “evil” oil companies, and looking for a scapegoat for high gas prices rather than understanding the Law of Supply and Demand. Oh, and already-high federal, state, and local taxes.

It’s all about pandering to people’s frustrations, so they won’t blame the real cause: the radical and against-all-reason natural resources policies of the Democrats and their environmentalist allies that keep us from developing the vast resources we have.

It’s the political equivalent of “Look! It’s Elvis!”

But, let us not forget, it’s also about control and power. These are, after all, progressives, social democrats. Some are full-blown Socialists. It’s their belief that only government can fairly (in their definition, again) distribute wealth. They may not be Marxist, and are thus willing to allow the shareholders to still own their companies, but government has first call on “your” money, to do with what it will. You can keep whatever they decide is reasonable.

Which is why I put “your” in quotes.

In their world, you are not a free citizen with unalienable rights, but a dependent who must wait to see how much of what you earn government will let you keep.

So, while this bill may be a bit of populist red meat that will never pass, it has a very real and very pernicious-to-liberty philosophy behind it.

And it’s another example why the Democrats should never win another election again.

via Jammie Wearing Fool

RELATED: Pirate’s Cove has suggestions for other “reasonable boards.”

(Crossposted at Sister Toldjah)


See 20-20? Dial 9-9-9? Which plan is the right plan? — Updated

October 25, 2011

One of the big issues on the Right side of American politics is large-scale tax reform: not just tinkering with rates or eliminating this or that deduction, but massive changes that would amount to junking the current byzantine progressive tax code that punishes wealth creation and saving and hobbles our economy by replacing it with something much simpler and, in the mind of most Americans, much fairer. Generally a flat income tax or a “fair tax” — a national sales tax.

Today Governor Rick Perry issued his proposals for tax reform to spur economic growth — the 20-20 Plan:

The plan starts with giving Americans a choice between a new, flat tax rate of 20% or their current income tax rate. The new flat tax preserves mortgage interest, charitable and state and local tax exemptions for families earning less than $500,000 annually, and it increases the standard deduction to $12,500 for individuals and dependents.

This simple 20% flat tax will allow Americans to file their taxes on a postcard, saving up to $483 billion in compliance costs. By eliminating the dozens of carve-outs that make the current code so incomprehensible, we will renew incentives for entrepreneurial risk-taking and investment that creates jobs, inspires Americans to work hard and forms the foundation of a strong economy. My plan also abolishes the death tax once and for all, providing needed certainty to American family farms and small businesses.

My plan restores American competitiveness in the global marketplace and provides strong incentives for U.S.-based employers to build new factories and create thousands of jobs here at home.

First, we will lower the corporate tax rate to 20%—dropping it from the second highest in the developed world to a rate on par with our global competitors. Second, we will encourage the swift repatriation of some of the $1.4 trillion estimated to be parked overseas by temporarily lowering the rate to 5.25%. And third, we will transition to a “territorial tax system”—as seen in Hong Kong and France, for example—that only taxes in-country income.

20-20 would also end the taxation of Social Security income, qualified dividends (It’s unclear what “qualified” means here), and long-term capital gains. A family of four would see their first $50,000 of income exempt from taxes, and the end of the death tax would mean that small family businesses wouldn’t have to be broken up to meet taxes.

One thing not often noted in reports I’ve seen is that 20-20 would cap spending would both cap spending at 18% of GDP, the modern historical average for tax revenues, and seek a balanced budget amendment. I consider these strong selling points, a simple fiscal restraint will take advantage of normal economic growth to balance the budget.

20-20 is in reply to Herman Cain’s 9-9-9 plan, which would impose a 9% personal income tax, 9% corporate income tax, and 9% national sales tax.

Let’s stipulate three things at the beginning: either plan would be better than the current mess, both have their strong points, and both have criticizable aspects.

Cain’s plan has been accused of disguising a Value-Added Tax (VAT) as a corporate income tax, and for giving the government an added revenue stream by creating both an income and a national sales tax.  I also have constitutional questions about a national sales tax: where is the federal authority to tax any sales transactions, especially if they stay within the boundaries of a single state?

Supporters, on the other hand, correctly point out that Cain’s plan is a transitional phase to a single Fair Tax.

Perry’s plan, meanwhile, retains more deductions (home mortgage, charitable, &c.), which leaves room for special interests to game the system, as they do now. However, I don’t think it’s likely, politics being the art of the possible, that one will be able to eliminate the home mortgage exemption, for example, especially in bad economic times. In that regard, 20-20 may be more practical than 9-9-9.

So, which is better? I’m not sure (no one would ever accuse me of being a numbers-guy), but, like Dan Mitchell, I lean toward 20-20 because it aims for the same goals while avoiding the VAT and tricky constitutional questions. And I’ll note the Club For Growth has endorsed 20-20.

Like I said, though, in the end, either would be better than what we have.

Which do you prefer?

LINKS: Ed Morrissey on the Perry conference call about 20-20. Tom Maguire thinks it’s a gimmick. Perry supporter Bryan Preston provides more details.

PS: I looked through the Romney site and could find no mention of a tax reform plan. If I’ve missed it, please post a link in the comments and I’ll add an update.

UPDATE: Okay, I found Mitt’s tax plan. It’s on page 37 of his Plan for Jobs and Economic Growth. The first thing I see is that it retains the current marginal rates and sets a “flatter, fairer, simpler structure” as a long-term goal. Ummm…. No, thanks.

(Crossposted at Sister Toldjah)


Why isn’t this man at Treasury?

September 15, 2011

That’s the question I ask myself every time Rep. Paul Ryan (R-WI) speaks about America’s economic and fiscal problems. Then I remember it’s because we have a (Social) Democratic, corporatist president who prefers someone who is either an admitted tax-cheat or an incompetent.

But I digress.

In the video below, Congressman Ryan describes the three qualities needed in a reformed tax code that is aimed at promoting real economic growth and a return to prosperity: fairness, competitiveness, and simplicity.

Take that, progressives.

And I’m kidding a bit in the headline; while I suspect Ryan would be superb at Treasury (or any economics related job in a new administration), I’d rather he stay in the House as a powerful committee chairman for a good, long time in order to be in place to put the brakes on crazy spending schemes.

Via Dan Mitchell, who has some good comments on Ryan’s video.

(Crossposted at Sister Toldjah)


Why California is circling the drain: the Amazon Tax Effect

August 16, 2011

I’ve written before of the self-defeating, bloody-minded stupidity underlying my state’s recent passage of a law forcing internet retailers with in-state affiliates to collect sales tax. (The “Amazon tax,” for short.) A few days ago, Portfolio.com provided a good example of the unintended consequences of this law with the story of a young, successful entrepreneur who left for Texas because the business environment here wasn’t worth the trouble:

Unnecessary Paperwork: The state mandates that all businesses that gross over $100,000 a year set up an account where they report quarterly on the sales tax that customers pay for goods sold. Although her company sells services, which are not taxed, rather than goods, the state told Douglass she would still have to fill out the laborious paperwork four times a year.

  •     “When I closed the account (by going into a local office and spending nearly an hour explaining my situation), they forced it open again and sent me a nastygram explaining that I would owe fines for not filing the quarterly report,” wrote Douglass.

High Taxes Plus Business Fees: The state charges an income tax of 10 percent on all income over $47,055, which comes on top of federal income tax of 25 percent on income over $34,000. On top of that, state residents pay sales tax ranging from 8 to slightly over 9 percent.

  •     “I paid enough in income tax for 2010 to the state of California alone to hire another new worker for my business,” wrote Douglass.

The state also charges an annual fee of $800 for a business to be a corporation in California.

The Amazon Tax: The final straw for Douglass, though, came when Jerry Brown, the state’s governor, signed a budget that included the so-called “Amazon tax.” The argument is that if Amazon has affiliates in California it has to collect sales tax. Douglass, who sells products on Amazon as a modest side business that yields a “few thousand dollars per year,” is one of the affiliates. Amazon cut California affiliates out because of the law, and according to Douglass, both she and the state of California lost out because of Brown’s move, since she paid income tax on the money she made via Amazon.

Douglass notes that she chose Texas because because it is one of only four states (the others are Nevada, South Dakota and Wyoming) that has no personal income tax, plus no corporate income tax.

(Emphases added)

In other words, not only did a state desperately in need of new jobs lose out on at least one (and how many others at other companies?), but the state didn’t just not get new revenue, it lost existing revenue, an outcome anyone with sense would have foreseen.

Times are bad enough without Sacramento aiming a shotgun at the state’s feet and pulling the trigger.

via Big Government

(Crossposted at Sister Toldjah)


Yet another reason I like Marco Rubio

July 15, 2011

Leadership and clarity. The Senator from Florida gets it: austerity alone isn’t the answer, though spending cuts and future discipline are essential. The federal government must also do those things necessary to create economic growth, which will in turn create jobs and the revenue the government needs to pay down the debt — without raising taxes.

Leadership and clarity, my friends:


California’s “Amazon tax” a colossal bust — UPDATED: repeal referendum?

July 12, 2011

I wrote a couple of weeks ago about the shortsighted stupidity shown by Governor Brown and the Democrat-dominated legislature when they passed a bill forcing Amazon to collect sales tax on sales made through California-based affiliates: Golden State, stupid state.

Now more evidence has piled up to show how dumb an idea this was. From Board of Equalization member and former state senator George Runner, here’s a list of the businesses that have ended their affiliate programs in California:

6pm.com
Amazon.com
Audible.com
B&H Photo & Electronics Corp.
Backcountry
Barware.com
Beach Trading Co.
BeautyBar.com
BedBathStore
Benchmark Brands Inc.
CSN Stores
Diapers.com
Drugstore.com
Endless.com
Fabric.com
Gaiam
GiftBaskets.com
Hayneedle
Higher Power Inc.
Lacrosse.com
Muscle and Strength
MyHabit.com
Northern Tool
Overton’s
Overstock.com
PC Connection
Potpourri Group
Quidsi
ShindigZ.com
Shoebuy, Inc.
Shopbop
SmallParts.com
Soap.com
The Tire Rack
Thinkgeek.com
Total Gym
Wine Enthusiast
Woot.com
Zappos.com

Be sure to check out Runner’s post for some choice quotes from now-former affiliates.

Not only will Sacramento not collect any new sales tax money from these companies, but it has lost all the income tax revenue it was already collecting from the affiliates at a time when California is suffering from record debt and deficits. And it will hurt those families and small businesses making a bit of money from their affiliate relationships.

As the great Strother Martin said in Butch Cassidy, “Morons! I’ve got morons on my team!”

UPDATE: Well, this is interesting. A movement has started to place a repeal measure on the ballot If it survives the vetting process, I give it a good chance of passing.

Edit: Speaking of morons, I need to learn to proofread my subject lines for spelling.

(Crossposted at Sister Toldjah)